GCC investments in EU surge to €63b: Eurostat

Foreign direct investments in the GCC from the European Union countries surged to €4.6 billion in 2007 to €18.9 billion in 2008.Luxembourg was the largest recipient of GCC FDI at €59.3 billion.

The UAE was the biggest GCC investor in Luxembourg. The UAE’s direct investment was €58.5 billion. Qatar came second (€641 million), Saudi Arabia (€134 million), Bahrain (€110 million) and Kuwait with €23 million.

Luxembourg was also the largest EU investor in the GCC at €12.7 billion, followed by Denmark (€1 billion), the UK (€867 million), France (€711 million) and Germany (€236 million).

FDI from the GCC made up 31.8 per cent of total FDI inflows into the EU in 2008, the second-biggest by a regional bloc. FDI worth €65.8 billion from North America to the EU made up 
33.1 per cent.

According to Saudi American Bank (Samba), over the five years ended June 2008, the cumulative acquisition of foreign assets by the GCC exceeded $900 billion. “Traditionally, the US has been the destination for the bulk of GCC capital. Indications are that interest in the US market has remained strong in recent years, accounting for almost half of the foreign assets accumulated during the past five years,” the bank said.

The share of GCC capital flows destined to countries other than the US over the past five years—some $450 billion—has found its way into a variety of asset types in other parts of the world. Sought-after investment destinations for GCC capital flows have been Europe, the Middle East and North Africa, and East Asia. FDI into these areas has shown particularly strong growth.

A Global Investment House report on foreign direct investment in the GCC said FDI into the region It grew 57.2 per cent during the period 2003-2008 on a compound annual growth rate basis.

“Continuous and new reforms have taken place in the GCC region for the past two decades to promote FDI and create a favourable legal environment for foreign investors,” data from the World Investment Report reveals. These include liberal entry, more incentives, few tax, and guarantees and protection

The major recipient of FDI in the GCC was Saudi Arabia where FDI inflow reached $38.3 billion in 2008, an increase of 57.2 per cent. On a compound annual growth rate basis, FDI inflows to Saudi Arabia increased 117.9p per cent during 2003-2008 which shows the country’s efforts to diversify, the report said.

The UAEwas ranked second among GCC as it received FDI inflow of $13.7 billion in 2008, a 3.4 per cent decrease from the previous year, it added.

Thus, Saudi Arabia and UAE account for 81.9 per cent of the total $63.4 billion FDI inflow in GCC. Qatar recorded a huge increase in FDI inflow last year, thanks to the governmental policies to easy regulations on foreign participants.

In Bahrain, FDI inflows reached $1.7 billion in 2008, up 2.2 per cent from 2007. In Qatar, foreign inflows were directed to investments in the LNG, power, and telecommunication sector, the report said.

Kuwait and Oman witnessed a drop FDI inflow despite easing limitation on foreign participation.

issacjohn@khaleejtimes.com